THE CHANCELLORS of Spain and Britain have joined forces with three other major European countries to criticise Donald Trump´s tax cut plans.
The ministers – from Europe´s five largest economies, Germany, France, Italy, Britain and Spain – have penned a joint letter saying the reforms risks starting a trade war.
President Trump´s tax plans represent the largest US tax overhaul in a generation.
Trump claims they will encourage business investment, give the middle classes a tax break and simplify the system. However, critics argue it is a tax break for the rich and corporations at the expense of the poor.
Yesterday´s letter – signed by Cristóbal Montoro of Spain and Philip Hammond of Britain – expresses greater concern about the changes “having a major distortive impact on international trade”.
The ministers add that the proposals could contradict World Trade Organisation (WTO) rules and America’s own tax guidelines.
The hard-hitting letter, to Treasury Secretary Steven Mnuchin and a number of US finance figures says: “It is important that the US government’s rights over domestic tax policy be exercised in a way that adheres with international obligations to which it has signed up.
“The inclusion of certain less conventional international tax provisions could contravene the US’s double taxation treaties and may risk having a major distortive impact on international trade.”
Ministers criticise various other proposals from the bill, which they say could penalise foreign companies trying to trade with the USA.
Trump was elected on an “America first” platform and the letter suggests concerns in Europe that his government will use tax reform trade discrimination.